OFG Bancorp (NYSE:OFG) Q4 2014 Earnings Conference Call - Final Transcript

Jan 30, 2015 • 10:00 am ET


OFG Bancorp (NYSE:OFG) Q4 2014 Earnings Conference Call - Final Transcript


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Good morning,My name is Paula and I will be your conference operator today. Thank you for joining us for this conference call for OFG Bancorp. Our speakers are Jos Rafael Fernandez, President, Chief Executive Officer and Vice Chairman and Ganesh Kumar, Executive Vice President and Chief Financial Officer. There is a presentation that accompanies todays remarks. It can be found on the Investor Relations website, under the webcast, presentations and other files page.

Please note this call may feature certain (Forward-Looking Cautionary Statements) All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session.I would now like to turn the call over to Mr. Fernandez.

Jose Rafael Fernandez

Thank you and good morning to all. I will cover the general overview and Ganesh will discuss key aspects of our financials. Please turn to slide three. We are pleased to report our 8th consecutive quarter of strong core performance since the acquisition of BBVA Puerto Rico operations. We earned $0.36 per share for the fourth quarter and $1.50.

Jose Rafael Fernandez

$1.50 per share for the year. Our results reflect what we believe is our sound strategy in a tough operating environment. We are prudently growing new loans and optimizing both loan yields and credit costs. Concurrently, we are focused on managing our expense footprint and further refining our loan servicing capabilities.

Looking at the fourth quarter, we saw higher originated loan balances and interest income, higher non-interest fee income and lower credit expenses FDIC amortization and recurring non-interest expense. All this more than offset lower interest income and lack of significant cost recoveries from acquired loans. Fourth quarter 2014 also included a non-recurring accrual of 3.8 million for a cost savings initiatives planned for 2015 and a lower tax effective tax rate.

In other areas, loan production was good, demand and savings deposits cost continue to fall and performance metrics remain high. All this had a beneficial effect on capital. The tangible common equity ratio rose to 9.25% and tangible book value increased to $15.25. As a result, as we previously announced in the fourth quarter, we repurchased $6.5 million in shares below tangible book,In addition the board increased the quarterly dividend per common share by 25% to $0.10 per quarter.

If you please turn to slide four, 2014 capped off another year of accomplishments for OFG and our oriental banking wealth management and insurance subsidiaries. Looking at our balance sheet, over the course of the year, acquired loans have declined to 42% of balances versus 52% a year ago. We improved our funding portfolio as demand and savings balances grew to 67% deposits from 60% and we reduced our loan and security balances to the Puerto Rico government sector by 24% which accounted for a good portion of decline in acquired loans in 2014.

As for income statement provisions were higher excluding the effect of last year's MPL's sales. This primarily reflected increased balances of originated loans versus acquired as opposed to any major deterioration